By Amy Baldwin
The Associated Press
NEW YORK - Many Wall Street analysts believe what stocks need now is a correction, a significant pullback after six months of rallies. And the market's performance this past week indicates one might already be under way.
Stocks suffered three big selloffs over the course of the week, and the Nasdaq composite index incurred its biggest one-day point loss in nearly 15 months Wednesday, losing 58.02.
"We are up six months. ... Where do you go from here?" said Larry Wachtel, market analyst at Wachovia Securities.
Wachtel said the market had to come down somewhat, but it's still not clear whether this past week's declines were sufficient to count as a true correction. The losses were certainly considerable.
The Nasdaq shed 6 percent in its worst performance in 17 months, since the week that ended April 26, 2002, when the index plunged 7.4 percent.
The Dow Jones industrial average lost 3.4 percent. The last time the Dow had a worse week was the week that ended March 28, when the blue chips lost 4.4 percent.
And the Standard & Poor's 500 index finished down 3.8 percent, its biggest weekly drop in eight months, or since the week ended Jan. 24, when the index gave back 4.5 percent.
Because there is no technical definition of a correction, it's not clear whether the market has corrected or is in the process. Analysts say corrections typically aren't apparent until after they are over and stocks head higher again.
The major indexes are on pace to end September lower, in keeping with the month's reputation for starting out strong but ending with losses. Historically, September has been the worst month on Wall Street.
September is tough on stocks for a variety of reasons. Companies often curtail spending as the end of the year approaches. Individual investors often cash in some gains, believing stocks have hit their highs for the year.
Since 1971, the Nasdaq on average has lost 0.8 percent in September, according to the Stock Trader's Almanac.
But September patterns aside, analysts were expecting the kind of declines seen this past week. With the market rallying since March, investors are concerned that stock prices are too high given a still fragile economic recovery.
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